India, Iran Pledge To Speed Up Chabahar Port Development

Chabahar, once a hardly-known city in Iran with a population of just over 100,000 has lately achieved significant importance in the arena of regional geopolitics. It started in 2016 when Indian leader Narendra Modi visited Iran and met his counterpart Hassan Rouhani. At that time, Modi announced plans to build and operate the Chabahar port in Iran with an investment of $500 million. 

Why Does India Want To Build A Port In Iran?

The port was New Delhi’s response to Beijing’s growing interest in Pakistan’s Gwadar region as part of their Belt and Road Initiative (BRI). Chabahar, which is some 100km west of Pakistan’s border, is intended to serve as a transit route for the Afghanistan and Central Asian states. There was a valid rationale to it. Pakistan, which has long served as the go-between country for India-Afghanistan trade, has had increasingly strained ties with both Kabul and New Delhi, where the respective governments’ antagonism towards Islamabad brought them closer. To woo Afghan leader Ashraf Ghani away from China’s BRI, such an alternative was in a way necessary and Chabahar’s location served the dual purpose of expanding trade while also containing Pakistan by keeping a close eye from a 100km radius. 

US Leaving Iran Deal Had Negative Impact On Chabahar Project

However, the grand project suffered a severe blow after Donald Trump withdrew from the Joint Comprehensive Plan of Action (JCPOA) and reimposed sanctions on Iran. Not only that, the US President also tried to strong-arm India into its camp, demanding that it reduce oil imports from the Islamic Republic. 

Such anti-Iran US policy made New Delhi’s rapprochement with Tehran difficult and that translated into a lack of interest in the development of Chabahar. According to reports from mid-2019, the company responsible for executing the project had failed to pay a European company for hardware supplies while also cancelling its contract to manage the port. Moreover, India also slashed the relevant budgetary allocation from INR 150 to INR 50. 

A New Hope For Chabahar

However, the past week rekindled some hope when Indian External Affairs Minister Dr. S. Jaishankar called upon his Iranian counterpart Javed Zarif in Tehran for a two-day visit. Both sides expressed their commitment to expand trade and commerce while also pledging to fast-track the development of Chabahar. 

“Completing the Chabahar-Zahedan railway and connecting it to Iran’s national railway can elevate the position of Chabahar port, revolutionise regional commerce and help transport goods on a cheaper and shorter route,” Rouhani said.

Just around the same time came an even more significant development, as various media houses reported that the US has given written assurance to India “that it will help facilitate global banks to fund the purchase of equipment worth $85 million to be erected at Chabahar port.”

Specifics Of The New Funding For Chabahar

According to the Hindu Businessline, “India Ports Global has ordered four rail-mounted quay cranes (RMQCs) for a combined $29.8 million from Chinese port crane maker Shanghai Zhenhua Heavy Industries Co Ltd (ZPMC) and 14 rubber-tyred gantry cranes or RTGCs for about $18 million from Finnish crane maker Cargotec OYJ for erecting at Chabahar port. It had also placed orders for purchasing mobile harbour cranes at Italy’s Italgru SRL.” 

Due to the US sanctions on Tehran, many global and Indian banks were forced to cut down on their Iran transactions, so the latest US assurance would help calm the financial institutions and help investors secure letters of credit. This might stoke some limited fears on Pakistan’s part, where the pace of China’s Belt and Road Initiative has slowed down in recent times.